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Showing posts from August, 2010

With your ideas we can build a better Alert HQ together

I am planning to add a premium section to the Trade-Radar web site. This members-only area will consist of content similar to Alert HQ but more unique. In fact, I will be naming it Alert HQ Premium and there will be a modest recurring charge to access the data.

Tell me what you'd like to see --

I would like to ask readers to submit ideas for content. Tell me what kinds of custom stock screens you would like to see and I'll try to build them.

Just to get the ball rolling, let me describe what I have built so far. The following alert lists will be generated three times per week based on our scans of the NYSE, NASDAQ and AMEX:
Value stocks breaking out Reasonable Value Momentum Stocks to Buy on a pullbackDividend Growth at Reasonable Value Over-priced and Over-bought ReportEbb and Flow Report - stocks on the move based on weekly dataTop 50 stocks based on Total Return RatioI think these alert lists will be unique in that I will be combining value analysis and technical analysis in …

Total Return Ratio -- 11 stocks John Neff might have liked

John Neff, who beat the S&P by 3% over the course of 30 years while managing the Vanguard Windsor Fund, attributed much of his success to a metric he liked to use dubbed the "total return ratio." Here is the definition:

Total Return Ratio = (analysts' expected earnings growth rate + dividend yield) / price-to-earnings ratio
What is interesting about this equation is that it takes into account both earnings growth and dividends. In this era of ultra-low bond yields, stocks that pay dividends are gaining more and more importance. That makes this metric all the more interesting.

Let's break the equation down into its constituent parts.

Dividend Yield = most recent annual dividend / current share price
Finding the analyst expected earnings growth rate isn't as hard as it sounds -- it's built into PEG which is available for most stocks at Yahoo Finance.

PEG = PE / annual EPS growth rate
Annual EPS growth rate = PE / PEG
Now that we have all the pieces, we can cal…

Intel cuts outlook -- confirms cautionary signal in Durable Goods report

From Business Wire today we have this report:
Intel Corporation (INTC) today announced that third-quarter revenue will be below the company's previous outlook. The company now expects third-quarter revenue to be $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. Revenue is being affected by weaker than expected demand for consumer PCs in mature markets. Inventories across the supply chain appear to be in-line with the company's revised expectations.

The company's expectation for third-quarter gross margin is now 66 percent, plus or minus a point, lower than the previous expectation of 67 percent, plus or minus a couple of points. The impact of lower volume is being partially offset by slightly higher average selling prices stemming from solid enterprise demand.
It's surprising that just over a month ago, Intel reported stellar earnings and very positive forward guidance. Now today we suddenly have this upd…

Stock Inspector Tips & Tricks -- fix bad "flash crash" data points

We haven't had another "flash crash" in a while but I still see crazy data points hanging around that can play havoc with stock charts.

When I go to a site like StockCharts.com, for example, and look at an ETF like IGW, the iShares Semiconductor ETF, there is a "flash crash" data point back in May that dips down below $15 on a day when the ETF was trading mostly in the mid-$40's. This data point makes the chart almost unreadable and tends to skew the technical analysis algorithms.

Did you know that if you are using Trade-Radar Stock Inspector, you can fix this wacky data point and get your technical analysis back on track?

You've probably noticed those fields on the right-hand side of the main screen in Stock Inspector. Those fields display the date, the open-high-low-close and volume data for the stock or ETF. Using the arrow buttons on the toolbar, you can sequence through that data and get to any date you choose.

Once you do find the wacky data point…

July Durable Goods -- mixed signals from tech keep investors on edge

The advanced report for Durable Goods for July was released Wednesday and it was pretty dismal.

The fact that the market managed to advance in the face of this report almost makes me think that a rally is in the offing. This is the second instance of bad news leading to gains in stocks. The first was the homebuilders stocks rallying after the horrific existing home sales report on Tuesday. And today we have the overall market gaining even though this report clearly shows one of the green shoots of the economy showing signs of wilting.

In any case, here are some of the highlights of this latest report:
New orders for manufactured durable goods in July increased $0.6 billion or 0.3 percent to $193.0 billion. Excluding transportation (primarily aircraft) new orders decreased 3.8 percent. (Yikes!) Excluding defense, new orders increased 0.3 percent. Shipments, up four of the last five months, increased $4.4 billion or 2.2 percent to $200.6 billion. Transportation equipment, had the larg…

Is company guidance worth listening to?

Yesterday I wrote a post titled "Q2 earnings scorecard -- believe the guidance or believe the bears?"  The point of that post was that forward guidance during the most recent earnings season closely matched the guidance offered during the previous earnings season and that, based on these fairly positive expectations of company management, it was unlikely that the economy was heading for a double dip.

It immediately afterward occurred to me that it might be worthwhile to test the hypothesis that Upside guidance actually results in increased earnings.

In Q1 of 2010, roughly 20% of the companies that offered any guidance at all provided Upside guidance. Here are the Q2 results for this optimistic set of companies:
77% did actually deliver increased earnings2% delivered no increase21% showed a decrease in earnings93% showed year-over-year top-line growth7% saw a decrease in revenues
Companies that offer Inline or Mixed guidance usually see their stock price slammed during earning…

Q2 earnings scorecard -- believe the guidance or believe the bears?

The 2010 2nd quarter earnings season has wound down so it's a good time to do a comparison the 1st quarter.

I always say that earnings are ancient history so I focus on forward guidance. Unfortunately only 40% of companies provide guidance; nevertheless, I would contend 40% is enough to get a good picture of where the market might be heading.

The two charts below compare Q2 to Q1. The percentages displayed are based on the total number of stocks in a sector that provided guidance. This first chart, for example, looks at how many stocks offered upside guidance as a percentage of stocks in a sector that provided guidance.
This chart shows that Q2 is roughly the same as Q1: in both quarters 23% of guidance offered was to the upside. In other words, there has been no decrease in upside guidance quarter-over-quarter. For those pessimists looking for evidence of the double dip, I'm afraid there is no bearish confirmation in this measure.

Not shown are the charts for Mixed guidance an…

Two reasonable value stocks raising dividends this week

With the stock market in distress and bonds yielding practically nothing many analysts and bloggers are proposing that investors should focus on companies paying dividends.

For this post, I've combined my Reasonable Value screen with a filter for those companies that have raised their dividend in the last week. Two stocks below qualified and, coincidentally, both raised their dividends by $0.08

SymbolNameIndustryPEPEGPrice  To SalesPrice To BookEV To EBITDADebt To EquityNew DividendPrevious DividendAFLAflac Inc.Accident & Health Insurance12.520.651.22.287.750.26451.21.12ALTEAlterra Capital Holdings Ltd.Property-Casualty Insurers4.910.621.220.73N/A0.09920.480.40
So are investors favoring these two companies? Here are the charts for each:



Though both stocks have wilted lately, Aflac seems to be holding up a bit better. Both the 200-day moving average and the 50-day moving average are still heading upward for Aflac while it looks like ALTE is really rolling over despite beating ea…

Analysts can't agree on outlook for semiconductors - what's an investor to do?

So, what else is new? Let's look at the two opposing viewpoints.

In this corner, the optimists --

Starting with the positive viewpoint, iSuppli is looking at the second half of the year as being a very positive time for the semiconductor industry.
"iSuppli now predicts global semiconductor revenue in 2010 will rise by 35.1 percent to reach $310.3 billion, up from $229.6 billion in 2009. iSuppli’s previous forecast, issued on May 6, predicted growth of 30.9 percent this year.

With an $80.7 billion increase, 2010 will bring the largest annual expansion in semiconductor revenue in history in dollar terms. In comparison, semiconductor revenue increased by slightly less than $60 billion during the next best year for dollar chip growth: the dot-com-fueled year of 2000."iSuppli points to several factors for the boom in chips: rising prices, inventory buildups and richer chip content in key electronic products like smart phones and advanced LCD-TVs.

If things are going so well, t…

Google keeps getting social - and stands to make money from it

Google has been in the limelight quite a bit lately. The main reasons are as follows:
Google's supposed repudiation of its commitment to "net neutrality"Oracle suing Google over an alleged violation of the terms of the Java licenseIn the most recent quarter, smartphones using the Android operating system actually outsold Apple's iPhone and RIMM's BlackberryFor those of you who have not yet come up to speed on these news items, the following links provide some excellent reading:
Why Google Became A Carrier-Humping, Net Neutrality Surrender MonkeyOracle's Java lawsuit undermines its open source credibilityAndroid Beats iPhone With New SubscribersMy two cents on the net neutrality issue is that Google is a public company with shareholders. It should be no surprise that they have chosen to "play along to get along" in the mobile space, an industry on which they are increasingly staking future growth prospects. As for Oracle, the company needs to call off…

A week without posting - here's what I've been up to

Wow, it's been a week since my last post. During that time markets have gone through some wild gyrations and the Trade-Radar blog has been silent.

I just want everyone to know that I've been busy working on a site redesign. The blog now gives you a preview of how things will look. Unfortunately, this process has been quite time consuming and has kept me from my usual rate of posting.

In addition to the new look and feel, I will soon be rolling out a members-only, premium section of the site that will provide some new stock signals. I'm quite excited about this but I want to do it right so I need to devote a serious effort to it before making it public. Stay tuned - there will be more information about this forthcoming.

In the meantime, if you'd like to register your opinion of the blog's new look, please leave a comment or send me an email.

15 under-valued stocks to buy on a pullback

Here's another "Reasonable Value" screen run against Tuesday's Trend Leaders list. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:
PE between 0 and16PEG between 0 and 1.2Price-to-Sales less than 2Debt-to-Equity less than 1EV to EBITDA less than 10 With the market showing some strength the last week or two, we actually have a Trend Leaders list that has a reasonable number of stocks on it now - over 500, as a matter of fact. This gives us a wider field in which to seek out those stocks that still have some value characteristics while exhibiting some strong price action. The table below lists this week's candidates:

Sym
bol NameIndustryLast PricePEPEGPrice To SalesPrice To BookDebt To EquityCash On HandDivi-
dendEV to EBITDACACICACI Int'l, Inc.EDP Services$47.6213.120.980.471.270.4666174.7M07.4DOVDover Corp.Industrial Machinery/
Components$48.5618.550.951.42.180.4383973.5M1.048.…

Does finding winning stocks have to be so hard?

With respect to the Trade-Radar Stock Inspector software, one of the requests I often get is that I should add a stock scanning facility. Users have said that they like all the analysis features in the software but that it's hard for individuals to unearth those good stocks that look like winners.

My reply has usually been that I have already done the scanning for them and the results are available at Alert HQ where I provide free stock picks and alerts. Daily and weekly BUY and SELL signals are available as well as Trend Leaders, Trend Busters, Swing Signals, Gaps and Cash Flow Kings.

But wait. There is another alternative: our affiliate friends at MarketClub have a technology they call Smart Scan.

Using Smart Scan, you can easily spot winning stocks, futures, precious metals, and currencies that meet one of 24 preset scanning criteria, including uptrends or downtrends.

As traders we have 3 potential positions we can take at all times: (1) We can be long the market (2) We can be …

Three weeks of earnings -- it's clear which sectors are strongest now

Three weeks of second quarter earnings season are in the books. Here's the status so far broken down by sector (analysis is provided below):

SectorEarnings BeatsY-o-Y Earnings IncreasesY-o-Y Revenue IncreasesUpside GuidanceTotal Providing GuidanceTotal Number of Stocks ReportingBasic Industries48546592372Capital Goods10495992156124Consumer Durables696777124391Consumer Non-Durables47424552764Consumer Services106901111081152Energy52435311178Finance1059857
09171Health Care8277921469113Miscellaneous23273142442Public Utilities29233141745Technology16317020736136238Transportation3534382342Totals8638209061184991232
Before getting into individual sectors, let's start by looking at some of the totals and calculating the percentages.
Earnings beats:  70%Year-over-Year Earnings Increases: 66.5%, down a few percent compared to last week's resultsYear-over-Year Revenue Increases: 73.5%Upside Guidance out of those providing guidance: 24%, down about two percent compared to last week Up…

Stocks take a rest -- will they wake up rejuvenated?

As I often do, I am taking the opportunity to provide an overview of this weekend's stock market BUY and SELL signals available at Alert HQ. This weekend we have the following stock picks and signals:
Reversal Alerts based on daily data, we have 34 Alert HQ BUY signals and 11 SELL signals
Reversal Alerts based on weekly data, we have 11 Alert HQ BUY signal and 12 SELL signals
We have 103 Bollinger Band Breakouts based on daily data and 73 are bullish. We also have 101 Breakouts based on weekly data of which 69 of them are bullish.We have 700 Cash Flow Kings7 Swing Signals --  4 are BUY signals and 3 are SELL signals399 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 82 stocks that are new additions to the list and 81 that fell off the previous list from Thursday.35 Trend Busters based on daily data of which all but 4 are BUY signals. We also have 46 Trend Busters based on weekly data  of…